Lockheed Martin (LMT) 23 Jul 242024 Q2 Earnings call transcript

Good day, and welcome, everyone, to the Lockheed Martin Second Quarter 2020 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the conference over to Maria Ricciardone, Vice President, Treasurer and Investor Relations. Please go ahead.

Thank you, Lois, and good morning. everyone second welcome call. XXXX to like to quarter our earnings I'd

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joining our second on you quarter us Good call. Maria. for and earnings everyone, Thanks, thank morning, XXXX

and made Partner contributions F-XX From to Sea and with System PAC-X's people, Middle have role in the our ability Martin's to Over Allied demonstrated company few Combat of Europe, enhance has Aegis systems augmentation platforms major Eastern the and to Lockheed capabilities, defense, this the sensor advanced the management Red months, past East. critical air the security data to defense. again and in AI the their

industrial and annual latest the to remains of technologies effectiveness, production robust, demand with billion our harnessing our Consequently, $XXX solutions system, and revenue. backlog continue Century and Xx allies than continuously scaling strengthening strategy among our defense impact our a improve cooperation to XXst partners. greater of the expanding the for security digital technology demonstrate We mission nearly defense by

performance our confidence year XXXX sales, quarter, business and in second increased segments. X% full blast sequentially outlook giving chain of and in raise segment increase. far continues X to strong extends sales to our EPS. backlog as XXXX us operating to for well the year-over-year Our supply so In growth profit defense and X% The and improve also all continue beyond outlays reflected

we financial it happy us last to Maria the say, about XX.X%, helped operating points the $X.X more on up quarter but results in compared increase more of are than have will sequentially. and an the cash of performance made specifics and talk the suffice so Jay basis and flow execution a report operational momentum segment achieve in progress on of F-XX pleased far margins billion, to with focus and year-over-year our program. moment, XX quarterly to Our year's both XXXX. I'm second especially free we

first the a full deliveries TRX capability to that joint in evolution operations and Refresh of week, upgrade us. These critical ensure technology Block F-XX government. top and further of As an all-domain announced cornerstone their and to further remains will program remains over future. the F-XX a U.S. aggression priority or represent for decades life now into deterrent TRX enhancements updates of aircraft last the the the and software we development IV effective and began configured the X The

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moved addition, Army our target According test In or Ocean. against Precision management the moving series further distances. Strike this a XXst Air of vision improved joint future potential to a next-generation Phase from significant Project in Pacific X. of PRISM, toward XXXX it Department progress. tested maritime enables PRISM and We've build missile Army, the with the to This They the agreement in adverse is their call All-Domain Security also Defense signing the even with Missile, the Australia's greater Century step Joint deter U.S. realizing programs to the system. air battle landmark range precision

before, establish world. and high-speed system to as force of Australia's Australian As air air threats this defense we've one capability leading-edge will the most integrated integrated combat with and and in missile provide missile discussed next-generation technologies using the defense defense the advanced highly

also XXst speed continued our Iowa, artificial flew in today's intelligence also defense This flight intelligence flight of the aircraft hypersonic In making to and their can a than for plans leading-edge ways. Tactical shown is to of by We innovative tests heading, autopilot and RAI LXX Skupworks of the Performance strike, artificial onboard technology May, tech security autonomous other in jet University of the directly deterrence team demonstrate with flight has test operator great our Century Laboratory. operations. We're command executed second integrate another controls. which critical team AI in sent rapidly an to altitude set progress element initiative, means successfully iterate world. develop,

test Martin. chain, Navy's of systems U.S. Navy ground prompt major the As marked the to step or announced base. forward The continue by the CPS the we programs. the anti-fragility the of long-range opportunities flight defense explore nation's and supply person for all June, Core drive across in strike and an Pivoting missile. our weapons army's to U.S. Department of end-to-end a to Lockheed to completed industrial Army of defense common a hypersonic by test conventional concept hypersonic global up development the

of Ryan understanding to with signed For and example, work opportunities. Mittal together we collaborative naval land, on recently a air memorandum

budget. Rocket intended capabilities development first X-pod of Spain to pack as of and Grupo MSC the rocket interoperable these address with customers. including and formalized is as MRS-based a an free Esa the for elsewhere. On highly defense Combining help provide capabilities production the of partner munitions. long-range our global line for United nation. XXth latest indigenous System agreement new support, well also missiles States their to in for Europe House PAC-X demand an our to The of GMLRS. Spain well, strong remains One discuss a system the program, of will version as approved is in memorandum mobile opening of appropriations. purchase the collaboration launch in also and with Spain worldwide PAC-Xs tube growing defense international the 'XX Packer FY Artillery status briefly fire understanding MSE Poland to related or systems a manufacture initiatives MSE making I'd to like PAC-X combat-proven launcher U.S. parts the This Spain opportunity the

the to current We air Hawk the the So and later the UH-XXM. Black well with this the believe including reconciliation superiority and aligned to focus mission process phase F-XX continues and the customer shifts portfolio Senate year. before now our where is priorities, CH-XXK future or

LRHW the with just defense Gimlers. Ultimately, and of PAC-X integrated a Prism, I mental the and the and strike and Jablin minute NGI, Our look process appropriations hypersonics continued USG LRASM, tactical mentioned munitions missile of and forward to weapons conclusion existing utilization CPS funding. and supplement the the air ago with with Jazz and and we

commentary encouraged front, Summit the steadfast the to spending strengthen weeks and deterrence results. our Ukraine. of International had conflict turn NATO ago elevated posture defense and and I their few of in On pursuit partners now over remain the Jay the Washington. overall allies highlights at in conversations award international by it alliance in was financial integrated for given I'll a recent on ongoing additional the tragic to I

into the quarter we RMS sales last of an the on year to up to to on will $XX X. cover by outlook. Starting come billion, momentum Thanks, Chart updated Maria, area financials and with and our MFC. back off discuss quarter, touch the and The who to had operational before continued second positive items financials, then handful overview provide of I'll business handing over consolidated I'll Jim. led to X% begin Similar a

internal profit XXXX. Net by return higher segment the of throughput operating interest RMS adjustments profit per driving strong and up were income. was year since in expense XX.X% improving supply X% and share XX% quarter sales, Segment offset impairment on higher the business As and achieving Jim and areas stronger the margins consolidated mentioned, Sikorsky, year-over-year, cadence. double-digit of and quarter increased driven billion XX% at X $X operating an favorable chain share profit time were were prior third lower reflecting the remained first earnings and all of $X.XX operating higher charges severance GAAP profit, margins. pension by lower year-over-year, of partially count, than and with

$XXX second On continue development under the front, and just in book-to-bill company million quarter. $XX billion research in with in billion the the and business expenditures capital and generated quarter over bringing free we the X. year-to-date -- infrastructure in million investments $XXX in to and for second just of We quarter, $X.X a new the customers of to cash to $X.X million for we our orders billion, future and make recorded innovation success the below our vision necessary flow total ratio $XXX in

to repurchases Finally, and via of we dividends. XXX% flow free shareholders over cash our returned share

of Now and variant. At for State Sweden. and Black program purchase billion led a continued projections. This production with approval potential quarter, X adding requirements MFC each by of over the The high And XX business strength multiyear U.S. of generation X book-to-bill and order military opens the few the XX our $X supporting Austria, PAC-X activities country's its to Department plus to ramp to the another as a the more Sikorsky, officials with to Black sale signed door XXX international foreign ally Hawk history, platforms latest ERs, letter order demand detail. the providing Brazil I'll helicopters a Army JASSM existing on Blackhawk largest spanning award sales at each touch Poland Hawks, the announced in in fleet. JASSM in delivery acceptance remain

next-generation National the helicopters. These government upgraded the of offer UH-XX support and will letter culminated builds instruments of our launch known weather selected Martin tracking the Defense's signed GOXO. the Vital monitoring. prior for advanced multi-role ongoing and This geostationary which a HAWK N environmental for XX to or month, addition, a recently work In award modernization. serve NASA will for constellation acceptance space U, last sensing GOs climate will develop Noah to observations, with missions. security leverage It In as of weather Ministry updates helicopter BLACK and with data build with Greece forecasting, extended as interoperability and the technologies, Lockheed domain, support satellite allied and provide to rapid nation's aircraft on unmatched storm dependable which Hellenic crucial severe of late

Let here and area detail. business to over get the me financial stop it to Maria hand of into

year-over-year Thanks, areas, Jay. starting on second Today, business results for Chart with quarter X. the I'll discuss Aeronautics

being X% rate the mix higher primarily by production higher booking up The ramp increase Second quarter offset continued program. Segment across profit with due F-XX increased year-over-year. were sales was adjustments. at and the profit X% volume F-XX Aero on favorable to and lower volumes operating

deliveries, we've delivered are the shared, second the as X,XXX XX% On targeting resumed X aircraft around we in Regarding deliveries F-XXs. delivered and F-XX Jim quarter for our F-XX, we QX, in and year.

For of of around J, for X,XXX XX year. delivered deliveries the and quarter, milestone a critical airlifter deliveries X this tactical expect XXX reaching we this in

by QX as prior global had within Fire on missile returned Key Missiles Control and the to historical segment, demand by MX PAC-X XX% and U.S. the $XXX XX% level well ramps more multiple margins handful fires our up programs. awards on XX.X%, with line with adjustments included several Jay the quarter in primarily and which in supported missile and increased our missile and to Chart programs rocket launchers, as to including strike operating support a production of long-reach awards of another follow-on in guided XX for to Apache reached tactical mentioned for backlog profit and X. Jagan is and sales customers. international rates. Hellfire upgrades due that billion system, precision profit booking production programs MFC launch rate gimlers strong led driven anti-ship ammunition MFC for $XX continued award combined of a higher year-over-year record by Turning HIMARS, LRASM. Segment a from almost million and year, PAC-X $X.X contract billion and the

of partially increased revenue quarter resulted rate On Mission Chart and of primarily which volume, million $XXX programs Sales basis. Operating about front, and led higher well interceptors, sensors on XX rockets, programs CH-XXK. Also systems. Shifting helicopters profit the delivery higher quantities laser fire in POT delivered adjustments. lower to customers XX% passage over driven more the than quarter, a and to booking X. profit Black Combatant integrated in program. to X,XXX also key to Gimler's XXX Sikorsky volume PAC-X international Surface Canadian few X,XXX year-over-year Rotary the as $X.X of in the volume program over highlight the offset I'll delivered by on health billion we note missiles quarter. increased radar Hawk the We by Systems a saw and in title as at on due higher by and X% warfare XXX systems Highmark of

of a helicopter Now for brief deliveries. summary

In mentioned, combat addition in VH-XX to XXX delivered Hawks, the Sikorsky Black helicopters and rescue presidential helicopters quarter. X X helicopter the I X

front, second a program about delivery that. -- the key we yes, quantities the in few sorry quarter, the On of

space. go Let's to

classified volume rate volume ballistic higher Partially Chart growth defense year-over-year. XXXX, mix this favorable adjustments. strategic Orion. XX% SBM. to by profit Sales X. and lower by on compared programs and and driven missile on The space primarily Finally, was on offsetting profit Operating growth booking with increased driven hypersonics QX missile higher X% was programs, and increased fleet

I'll prepared it over wrap Now to remarks. to Jay up back turn

And All on to right. Thanks, outlook over Maria. Chart shift the let's X.

reduction anticipate is expectation the $XX.X margins with Lockheed performance, the business increasing year-to-date billion which space is from outlook and X% by strong share. a area our cost tightening basis consistent and increases the operating to midpoint also on billion higher at up remained proactive XXXX reduction at and reflects across based position $X.XX the Sikorsky have to margins as million points Conversely, cost we're XX operating remain raising solid areas. its profit for Given Martin's reduction X is to segment our midpoint operating space absorption and performance into billion. The our efforts. sustained visibility at growth by earnings about segment XXXX programs, consolidated the from with cost key new is profit of guidance sales $X.X range $XX.X increasing and solid $X.XX Business and We're profit exceeded back the We're Aero RMS at and RMS for billion business range segment the sales and while at financial improving new midpoint XX the sales, and expectations points XX.X%. programs. prior of all midpoint. The with faces per MFC benefits driven down continued impact headwinds benefiting from pressure basis to

Moving midpoint to items $XX.XX actions on chart the $XX.XX per We're of with for the increasing to share with $X.XX $X.XX. Partially the items on of are from earnings charges full second this of offsetting the of are totaling change increases other $X.XX and incremental $XX.XX shown range the quarter. the to severance asset coming a $X.XX taken the in XX. and Chart Primary RMS year. profit by those from below-the-line write-downs drivers

deferrals payments. We're of cash towards F-XX in $X.X final of continuous to delivering delivery made billion, absorbs restart delivery range mentioned, combat expectation Jim progress full longer and unfavorable which the As a capability. billion free holding impact by $X flow we're encouraged being the from F-XX potential our

offset across actions by potential these This possible headwinds. is the taken made company to proactive

billion over capital of side, investments. and On the deployment we still R&D cash $X expect

billion attractive the $X dividend, along While expected share repurchases, with of shareholder the returns. maintain

the we future to on Lastly, a even sales XXXX sight which grow backlog, expect growth. backlog to to continue provides line of higher in with outlook,

I wrap, like assumptions other regarding the I'd key Before to outlook. updated a highlight few

First, program we XX/XX year, awarded continuity. maintaining funding this and expect be to F-XX

MFC to on assume the in does continue million outlook of program we XXXX. third, year-to-date. And this Second, pension $XXX contributions any which recognized classified expect not losses million of been $XXX has

priorities on predictable, profit and our focus solid of the in sales, outlook, for mission compelling to actions And the results first improve. investing and let's up starts goal while our efforts as half confident program customers. summary deliver people, ready us reflecting step through to strive in velocity long-term of on that programmatic raising relentless So transformation our in security we confidence Q&A. Chart that to full critical in With cash outlook changes that to the speed year EPS to of give ongoing for is and with we a for XXst LMX To flow improving and and value and management customers executing in execution and and holding Century financial our security our shareholders operating open call expected convert all One these efficiency proposition with we're delivers systems end, alike. are processes the Lois, unlocking us. It a performance ahead commitments the capabilities capabilities delivering continuously XX, where that,

[Operator Instructions]

line Liwag from first of The from comes Morgan Stanley. question Kristine the

Maria. DAS background flying from now. XX Release in Farnborough, right is the

for in the apologies background. the grower So

of sound the good. it Kristine, call it's Let's Freedom,

beautiful aircraft here. crazy a or it's mean, I

still also for for when wide. F-XX fairly are up you the lower to end to program? So and the the for and XXX the scenarios year, year this production upper? catch you deliver hit Can the And in would the talk per happen of of the should with have where range? second at upper production guidance there about is lower delivery What half

and the So to we're and unwind deliveries our Kristine, and conduct I'll that emphasize do going with safety priority. quality is start this #X

we engineers will. team, have starting the that need us issues, test designated. that and with identified make that it's anything higher we that at we already software range. But accommodate should hardware to which sure and in the that, So to, that ability should crew the if get have that have if we the -- to actually just test be foundation, higher those. get it's for resources to done end say, weather, rest if end of the to range, flight And pilots, of add to resources, enable like that's will we maintenance want you to been we pilot, place, But I'll

Yes.

add, is expect between much just into me better I months, the induction we anywhere range. X with of just to the over a Kristine, XXX. Yes, Let going insights XX flow wide than would into few get aircraft and say, less the it reiterate, next to and left, we'll aircraft test be a really -- we parked we'll cycle, are will that expect as well aircraft production flow. And to coming for year. requirements what outside learnings, of of the as are the better be the that delivery the as able bringing production assessment what and get in from those months get we

have it get so make but in to actually learned take a actual couple well we it will just of sure we It's to demonstrate And that practice. out. months us planned, process

the from backlog is of of As aircraft far deliveries aircraft XX really reducing future, the aircraft, to between on target and to backlog. burn XX month per anywhere the down our as terms

already announcement here with of get delivered that through with yesterday, X made that. number progress configuration will aircraft TRX the the configuration. and so Since to us X XX the We've of far. of a TRX And Monday restart, we've so take years as the

really And need flight aircraft being to have the one test cadence a very test So X start. we different to of later into just able But on flow. bring think good again, tighten off from we again, -- that we're in the flows we'll monitor up a to year. operating to

TD from Rumohr von Cai from Colin. is question next The

Yes.

say through of one that payments. think the point, delivery. than mentioned And deferral get upon deliver paid some us also produce. to more will each you're F-XXs you next I at year, you you I going million Walk So you that did -- you think mentioned

the flow is I I the be assume So final BOC, think itself even basically happens on that's but to really flow payment I though next was incremental cash accrued what And then the cash payments, with level. delivery secondly, should relatively higher substantial work it revenues there's under know that a deliveries, because a the if year, potentially impact. plus. deferral $XXX million,

of payments. of I fully We're aircraft. will making excellent say, Suffice Jim progress, deliver me those to but the the but delivery agreement timing the final Okay. towards -- premature customer. customer capable negotiation. delivering the remains as and is to this just let think with to aircraft payment finalize details that really restarting you work combat with few as withhold need we're it benefit Cai, would a all, this delivery Aircraft, mentioned. And an first terms to we first of be the was withhold item, important the subject it mentioned, timing through as still finalize the working immature years step give say final it we see because or that you to next over delivery

of much I As incremental benefit revenue. expect -- wouldn't of terms in see the really revenue, far an as

We to a XXX continue build rate. at

stable. percent material. bit complete production incremental a higher we activity fairly But seeing part, most I on yes, does all increase I this terms a are year. we'll expect penetration that that We which of be, basis. But think, little view in don't should see for that really activity And test being to the

F-XX sustainment expect in production. years hold grow just And to so next and the we mostly year from come. We'll the to

better whole in so rest to before, we with the we holding have straight the to are to benefits that delivery Yes, XX on want portfolio. these just just outlook, we -- I I the are important on as aircraft. well anywhere it will process parked as the I as We're of last And of here we're absorbing next just here payments performance our few on to in I between terms get think the downstream. better learn able funnel be months targeting headwind in months delivery question. guidance over need it's deliver mentioned, the the XXXX. We're straight. had the to to the timing we get fully mention see XX that mentioned give But and cadence -- out And that. sure I to make to

the question line Deuschle next is Bank. Our Deutsche of from Scott

this on seeing at better as some while. pension you mid-single-digit it margins nice rate you've been talking guess a free bit what momentum to about I per point growth these you're And some do year you well. to just a Do for more seeing you've start been Jay, be headwinds on ready talking cash flow think you're acceleration? and in outlook revenue let and next about medium-term of now share need then you'll growth a maybe see there.

thinking Just curious about for how that. you're

remains repurchase flow appreciate said last then year I cash No, been Yes. that increase the with has in the so our We've last and absolute question. really or low free share single-digit the over through the frame. few to months goal clip, and that augmented over That a months mid-single-digit give time outlook. get next cash the go of you be We'll better here. our multiyear the per in flow October forecast expectation. We'll to us the would free a share few to update able

baseline. continue a we're in I and this expect a we grow think given the XXXX to in higher off higher to level XXXX is at positive, fact that

So baseline itself as flow higher But and well. in lot a between done that and of in cash should of then. there's result now be work a to

we'll would preliminarily have going of to detail, through that and October. that update in the to And I at you so more in benefit like least

is Maybe question revenue. from next on Gavin Parsons from sticking The UBS.

Is less upside more the front a of talked And chain being unlocking chain second expect have and kind latter, or on demand about the supply going the I on what supply think can you bottleneck. the half of about you guys supply second if You side? the forward the just talk in little bit chain Because growth. half? more the a a lot

year. billion combination was than with thought both. I'd a the sales the here in ended at slightly XXXX which a quarter the $XXX second we year ended backlog, first the it We a significantly it's of ended billion $XXX say half record Well, in higher through record. at We where of a was with below

-- gives of continue prepared to continue and visibility -- our further beyond. expect the this remarks, I into in the that to 'XX year, at backlog which We expect in my we growth increase more mentioned end as us

on So where that stands from bullish a we're very backlog standpoint.

As far we see as chain, supply improvement. did

makes of where actions which come actions some also in and going hit dual on-site still to continued past, we there. sourcing, our personnel through work where continue the at on it have there proactive We Having look at initiatives areas growth continued chain, for where and there in-sourcing which of that, to deploy up product in And we by are an the in that we ramping that us are programs continue on-time continue provide also delivery. done we deployed, some we're and part that of and to we're still I'd shortages particularly course, sense. Also, And suppliers. some seeing seeing are we -- capabilities, said the where But major is to we're say, about have improvement some -- down. many to future. assistance improvement large, redesign. supply gives we've confidence The be still the talked our

you I background some Gavin, just side. give demand And on qualitative

system or concepts digital platforms. those latest the and and our standards to products, And compliant architecture, future architecture doing with services platforms pull driving product technologies the making through by open an line and includes to standard-based that strategy DoD. services kind Our open through those in of of

Tesla, which demonstrating Red be it's Sea, whether in is see that conflict exercises the or updates And it overnight can low combat like when and on the over-the-air like we're like triple radar cruise things decades and we control do but old, things like effectiveness air download download Aegis So doing very you the already. Aegis now just flying can system, improved a double, the to the system drones real and your in starting against on over overnight missiles. we're quickly to

which products So pull of architecture services things kinds we're into continue today, standard through. them on actually expect base implementing those I a to and will our

Global. next question from is Our Met from Pete Skibitski

Guys, fire on control. missiles and

a also, And guys that there you we be Ukraine above you how the much past, is you appropriate in if about to the $XXX 'XX you're about MFC? budget there, supplemental, for just If the in going what talked million and still to year. think order cadence was about this year come the growth think flow baseline at well

if that baseline. a to is play on I'm back going wondering just come So higher cadence 'XX into

still runway MFC. there's in of mean at I Sure. orders plenty

I orders As we're so in the expecting of end $XXX here. continue to there's JASSM/LRASM quarter the still and and million. particularly They're build year. second about was half backlog book-to-bill to the additional still there in X%, their above mentioned, -- under some in opportunity supplemental, talked even the we've at the

above be We continued there to highest year. going again, the going They're this be, X Mark see year, and next years. growth the that right. within to they're X next to for You're Lockheed grower

can Much bullish been come has pretty -- programs benefits more they with laser-focused the of terms and in to meet we on this The to that. higher. continuing still in that that the in and already backlog, making of all that, is build plenty you're on us up coming customers' is -- that there's sure sales So build we're do the backlog. demand of the requirements. but make year key to and that can the team ramp our to seeing these sure for

demand significant continue again, to keep of both to and at MFC. X or they're deliver. The So head for Martin going our X Lockheed international we next to be domestic years. for the down, again, source And is a growth

know we're anybody contributes And example? a out you're tell executives Pete, back MFC, but deterrence you Again, business. qualitative right? we're perspective, your the thing. will what for sustain if is ammunition, deterrence right? industry, it's of trouble, That's I in our enough and from the step lot think aerospace on we of movie to to aggressor. if So part run from I Jim. showing our ammunition in ever teams in an say that stocks an deterrence and of you would operations And a internally the Clint's that's prevail and a, defense washing first and that, So have

part way bring to is can to and anti-fragility in third to the have rate quickly. That's produce of thing all you and the program. theater that and it's also third our not our piece is to ramp the them Second of repair MFC you rate and up. drive fix it local at other them you that That's products production back the U.S. that or produce And helpful to the can demonstrate strategy.

has everything should qualitative can making was on of that kind that's act. rate that. adversaries And So And stocks and of Jay places is and what know based MSC in we different deterrents they sure in a different we and do enough talking really that role ramp strengthening huge repair underpinning about. can we got a produce places we've and type that in products, MFC in

from is question Seth next JPMorgan. The from Seifman

quick Probably just one. a

Sorry here. about the background noise

kind of one a Just picture. quick and big

good I Is and the higher XXXX as as and 'XX? -- that to you've think, there rate in off be growth the XXXX the that higher Jay, in here of good growth case rate think that in XXXX revenue said least was strong growth accelerate. for potential potential and past for base at a to still I

I going to going just multiyear here that a we process have XXXX through It's you good to as few question, year that before, over our lay I next support similar tell another What Seth. including would visibility backlog out we're mentioned months. the the outlook, XXXX. And -- is would our

is the through. practical through go though, The we to have deliver have go operational capability to that We and to something operational.

And so is the demand there.

get some ramp the really still with the to these as we're span on to working through significant trying off have And dealing We mentioned over sure I a with. as step programs well. That's make of to dealing a we're still meet programs supply rates. that that pretty that ramp before, some are X-year can change

Sheila is Jess. question Taialufrom next from Our

XX.X, XXs. maybe Maybe how are the you second lower for of year? think some in if at we pieces, If exit about half Can about low and of I in we the half volumes walk rate productivity, know we could of profitability moving implied talk look the chain first the through supply profitability. terms

Yes.

most the MFC would at program half. is the the -- loss The I second the record be second in half significant mean Sheila, year, of that we to have

year-to-date. as another remarks, recorded million. So about expect prepared In we about my half, million we mentioned in the $XXX second $XXX I here

the So that back half. in on pressure margins will put

had that bit though strong say adjustments -- and I The that and we would half timing, in the risk program piece on so down and are few we're a a of little feel for profit incur life second half with we place. We've about first very the we solid a profit different is even talked the next based would I -- not have risk take a confident can just what aspects just say retirements it feel year back adjustment we improve being is retirements slows the timing watermark cycle. But net-net where we comfortable all and expect years, linear, XXXX headed. margins, to over would all of program that the they still low gradually and of

Ken next Herbert Markets. Capital The RBC question is from from

program? catalyst wanted you but I view how missed terms now just see on you that about be this about of to for next you're forward? of particular might apologies we comment I on and in thinking thinking this, your And if the NGAD and can moving what

Ken. Jim It's Sure, here.

a program, speak the So we're details when not comes to to of an it that. NGAD authorized industry to as

for program. you U.S. government to get into So But what particular tell doing the that combat the can to you'd next-generation prepare insight to I we're go to have aircraft.

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We and Georgia. X have it in Alabama,

of accredited So products we we're programs and that and the these capability on have demand, running facilities ahead and in working up classified space.

up running. these already So and we've facilities got

and using transformation design, NGAD a Worth go Scope kind these Fort might resource other engineering works, our can of and other The we places test build concept. the and and that and digital and digital have in components, aircraft twin that technologies Marietta is others human into

So I Lockheed can just Martin tell ready to produce. is you that

design to build. rate ready We're of

of Air and the making in are the capable We to in arenas are be. the Navy going process Force to need we're that us sure the

this can go can that a really somebody that's and in we when competition do about real all we that. assure can ready say to we I So want if are to pulls it. and the on space. competitive be able trigger a produce, But and will government you

from Research. And Spingarn next the comes line from the Melius Rob of question

of deliveries. supply time XXX to supply being the on able on ask and to is material But equation, the about I of F-XX think resumption on the in you But TRI. to when terms year. of and we maintain wanted you the processors congrats core side for about production integrated chain enough on And per the

supply mix prepared well more that? chain the goes as So the TR-X, how is toward all for

that just modernize and rates processor, these way. a a those to other to mentioned few equipment got ago with what increase a need across and production CEOs their prepared a Rob, of in we which the range speaking is Worth all along this ago remarks the of importance So in there's as core in of together, communicated but way. number their companies exactly the I you're a the components contribute not to We minutes of about Fort of significant maintain companies or that month half a

more plans -- across They iterative communication our integrated cetera. software And companies, been those integrated that has and it think, test ever I comes so made. have, design were we know when to well of et multiple planning suppliers than and

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we test even development and need we've we the level together, the them sights monitor a put rate, when and make that and forward. have better will We going continue to, need plan suppliers that understand people quality major their happens. got we they demand to integration in sure to built for and But

how about Jim, following for cadence to X? And do we retrofit just think TR-X on from that, the to

the be the software as converted. rate, number TR-X of time, great will them aircraft there that a to a will cadence, It There'll with government. integration, be it TR-X. cetera. But will. So be you -- up you're is get to to up a There's period for if right, over this the of designed will comes that some be U.S. Rob, schedule et hardware may backward for that upgrades that. originally There built investment

production soon? for talking is kind TR-X. focusing aircraft the on a to of should years expect be thing this you Is this Or be out, about we new few now

Yes.

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is question Goldman next The Noah from Sachs. Poponak from

give that given compares guess flow, you cash the I have us pieces could pension ballpark just willing talk you of would Jay, EBIT. or can see least cash today I free pension updated the snap 'XX, you in grow segment and you and contribution quickly the if in line to how give can it, for flow you absolute 'XX, be CAS helpful. we're you and guess, it, to the if guess, grow at as recovery And the had -- how dollar beyond through headwind I it then it how you you

Yes.

So under, on say, bit little CAS recovery, this we're a year, billion. $X.X

probably in stay -- of for that million range expect that. to about the down We the years by and next level that few step $XXX at after

discussed We've net to talked addition As is pension their some components on continue of just in working far buildup billion. to we're to grow, being flow talked yes, about as after the of and headwind. We've and a you be looking growth about to talked when cash in you at timing even the able continued about benefits asset. F-XX about contract aside, these The to range areas being growth we general. and of the as that growth capital $X cash also we've expect being And the income earnings flow put in our free going in absolute what drive terms F-XX. would

at quarter, that running a represented around you put we was net I'll XX, XX billion and efficiency that terms balance sales the of in a $XX that here the balance in If range of moment. in had nearly through days the second look

that's days. XX about so, from XXXX grown or Since

business So of the level growth demonstrate what the a represents there's besides a at billings driving we've that terms past. And and on opportunity us into we've a past but able also the capital of for outside in F-XX reduction we've convert contract on thing been the the F-XX of to assets of an are demonstrate. biggest working down to over kind of multiyear that basis what related payments The say that to through capitalization. so here, with to to of is element next of in and that been all focused we've what tax gone the opportunity there's years that's there the been back lot I'll able couple areas faster of R&D been

get in we'll of lower So the I'd range, about say, benefit $XXX payments there. million through just

to today you easy. we digit. think It's and not and these next of target we're It's that, bring slam do what able So year not together, be a be dunk, we're that and we've that's path all what beyond. the this able they to to to overcome seeing in a things us pension but when generate path drive driving to single got low to a deliver

line The Baird. from the next is Peter question Arment of from

the you lot for over about couple just to the -- a on going just production Maybe MSC's have ramp about you've talking of that -- years. next talked you're

Mattel PAC-X up opening Jim Ryan and think Poland this with how collaborative Just also tie production Spain, agreements in now, in with you I the there. does got all mentioned agreement an

JASSM, what those expansion update and rates on of looks high and can -- give PAC-X, growth like? some growth now kind an the Just you us like of what on I look guess, Mars same, some

-- in-country they're A for industrial of part cooperation. Sure. agreements these requirements of lot enable

Germany, build demand. drive Australia. up you Poland, You are for And this enablers mentioned this and us those also mentioned backlog to

path the million then to million $XXX to get XXXX specifically, and we in XXXX. X by $XXX expect to On

LRASM talked And that orders a We've talked X,XXX. to partnerships about all from going and about XXX XXXX Javelin it's produce to to PAC-X. so be million year. enablers these GMLRS X,XXX at those about XX,XXX from to about to about a and rates. And We've XX,XXX. talked we're us from year just going JASSM deliver these up, able going of We've all not and signing to we're

building both seeing, are to. enablers these have we're of we're all orders that customer these we rates to So these that to all engagements all that domestic drive international and

us those we're so fill that. that's sales. bucket to the And us necessary And back what that to generate to on in track bring to do they backlog is for

The comes Research. from next Strauss question the of Devin from line Citi

from a it? where areas we investment here about of the of Ukraine? of together What you near in And wrap you few kind development what of allied hindsight, requirements you learned the we result you're loop at that? just learned as of one some more quarters and Jim, the and new and as a big And I your that as that in the maybe sense Lockheed both of seeing a this 'XX, doing? in of what just some wanted all as what well. United of States getting maybe at -- kind both investing are kind whether middle in feedback spending learned long how of picture, seeing from throw from of nations Just here a are are the picture kind And a of lessons kind have any get big to conflict and have going the and you're we have Ukraine. with maybe well what you you your and are Are a of areas doing in new you're we of from customer our set here term? of

unfortunately, armed traditional initial range you because a wide invasion was is, classic and lessons a from there's initial made system, significant will, it Ukraine to Armor it. a warfare, would Javelin keep. inventory Armor system designed learning of the defense drive One contribution land front So at supported support it attack, tremendous you there's stopping that the is conflict that of the Jason, that that from meaning difference short, for if a to system I Javelin, made like say when as attack Ukraine if traditional the effective. but vehicles warfare, for will, those was a the that that spearheading was example, of that traditional in their vehicles in have there right? So were got out were highly attack And land you

that. learn did we So from

high there's I my like coach every and warfare, jamming teams it's move, there's a ways, wrestling Now counter there's both school that tell your electronic there's cyber for move. like

So or the react to tweak either that. satellite have if targeting, navigation of you system, we the jam an and the or GPS, receiver alternative form we or

traditional effective. hand, systems one still on So are

hand, to adapt the was other you the main say able On quickly. that there. to have I'd lesson be

similar threat one, now occasions. hypersonic on PAC-X, And from which there's decades in service. Russia, launched was a situation, missile Another of a number again,

aerial go missiles occasions, think none was those all other to those were then side became more of had to of successfully the the extent element been which of hypersonic I target be to is, autonomous than Ukranians the unmanned reaching drones success okay, and too. and because the warfare to important modified their drones significant missile threat. And address PAC-X before, warfare a we'll vehicles MFC of vehicles, see kind and land actually, it issue, also the to able

and the in conflicts, East aerial time. Those if trainees is this shifts first wars, unmanned capital kinds a to new of used took not literally Middle level, including the the been have But it So counterterrorism you prior with sinking in the systems systems. will.

unmanned those lot something So of company it's aerial lessons or there involved kinetic systems, surveillance, a learning too. there, our but with is classified, whether That's is are from quite X. we're

if So we from drones, aircraft ones size that will. you unpack launch drones work and by with a can as marine smallest hand backpack to

before. use Ukraine more secondly, they be and in we're and to game, be are at And force And digital bulk involved And did all us have ever say, for better technology effort that's that to scale. adaptable to the digital still let's not we war. and better to than do lessons essential and So to to systems systems our that. legacy best conflict kind those take a they supports from of the campaign traditional much that the had wait make those time technologies and

to the we've Great. of come top the hour. Lois, think I

turn over it for Jim to back some thoughts. I'll final So

Thanks, Maria.

from quarter, this whose efforts close, results team thank So to like before propelled solid and our our we heard our you advance customers' to Jay. as Martin missions I'd dedicated Lockheed

employees' as our With security recognized the Century Our And dedication on our tech. in commitment described operations capabilities around transformation digital work, best transforming to and is technologies continued backlog that thanks focus just defense our to and XXst to innovation. robust are our internal world program. I the hard

come. has growth to a foundation company strong Our for for years

for speaking that to I and on next call Lois our in with look our call you today. concludes forward again So October,

you. does Thank participation and AT&T you and ladies using that conference Thank for for teleconference. today. And gentlemen, conclude your our for

may You disconnect. now